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Does The Buyer Matter When Selling A Manufacturing Company?

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Comments & Replies: 5     Views: 2226     Posted By: Timothy Cunha JD  Timothy Cunha JD: Business Broker, SF Bay Area



Topics: Buying A Business, Selling A Business     Tags: buying a business, selling a business



I hear the comment, "As long as they have the money that’s good enough for me” on occasion; but when it comes to a manufacturing company, it can make a big difference finding the right buyer is critical. Is the manufacturing company best suited to an absentee investor or a hands-on entrepreneur manager? An expert in this industry sector or a neophyte? An existing competitor or someone new to the industry?

Here is my opinion on this matter:

Who the buyer is can affect the negotiation process. The buyer could be an employee, a relative, an individual or corporate investor, a platform company rolling up synergistic operations, a competitor. For each of these a different approach is needed. Again, the experienced business broker can manage the process most effectively.

What experience have other brokers had identifying the right buyer for a manufacturing company? Would like to know your experiences regarding if the buyer truly does make a difference when buying a manufacturing company, please comment above.


From a business purchase financing perspective an owner (or the broker representative) of a manufacturing company being offered for sale should get their business "pre-approved" for acquisition financing to confirm that their asking price and deal structure they are offering can be financed - and what types of financing would be available so that potential buyers are not wasting their time. Also a professional pre-approval should give a profile of a potential buyers that would be approved for acquisition financing for a manufacturing company purchase.

Contributor: Transactional Attorney

Tim poses a great question that applies to all business purchases.

As an attorney who has started, bought and sold businesses personally as well guiding clients in the process I can tell you from my own experience that finding the "right" buyer is always critical - though the issues may be magnified in a small manufacturing business which can often rely on an owner's expert knowledge for success.

Whether you're providing seller financing and want to ensure that the buyer will make their monthly payments or if you're doing an all cash deal and simply want to reduce the likelihood that your buyer will sue you in the future it's key to make sure the buyer is the right fit for your business.

In manufacturing, or any other industry where owner expertise can be a factor in the business operations, it's important to both find someone who either has or can quickly learn the skills needed and to disclose the extent to which the seller has special skills and experience that are required to run the business successfully.

Note: Every business and transaction is different. This information is provided for general purposes only and should not be taken as or used as legal advice. If you are conducting a business transaction consult with your own legal counsel for advice specific to your business.


Mark makes some really valuable points. And, as an attorney myself (licensed in New Jersey, not California), I can't emphasize enough how important it is for buyers and sellers to retain an attorney with specific expertise in business transactions to represent them in the transfer of a business. Just like doctors, lawyers have specialties--you wouldn't consult a urologist to perform your heart surgery; the same logic applies to lawyers. A lawyer like Mark Chatow not only understands the legal aspects of the buy-sell transaction, but also comprehends and appreciates all the business-related nuances that can spell the difference between the transaction succeeding and failing.


Certain industries such as food and hospitality, the buyer can be brought up to speed through training on how to run the business, but there are other niche markets, such as those that specific manufacturing fields fulfill where it would be more difficult for the new owner who has no experience to step into. Many manufacturing companies the owner should have a competent level of expertise because they are the driving force of the company. In such a litigious state such as California, it's important for a business broker and seller to find the right buyer for a business especially if the business requires a high level of expertise, because if the buyer fails and was ill equipped to purchase the business then there is a high chance that they may seek damages from parties involved.


  Helpful Resources To Assist In Selling And Buying California Businesses
Diane Boudreau-Tschetter: Escrow And Bulk Sale Services - California

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Michael Floorman, Business Brokerage, BTI, San Francisco Bay Area

Business Team, San Jose (Campbell) located in the Pruneyard Towers at Bascom and Hamilton. Established in 1981 Business Team with over 6600 sales to date has 1000 business listings to choose from, paid Google advertising. We offer highly trained and experienced professionals.

Matt Sadati, Business Broker, SF Bay Area, Northern CA

I have Engineering and Law, JD degree, with over 30 years of experience in all phases of entrepreneurship. During the past 15 years my concentration has been in business of mergers and consulting. I have owned and operated over 33 businesses each having one to 30 branches.

William Park, Business Broker - Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.

George Lanza, Business Broker, At Plethora Business Sales

Plethora Businesses, a division of A Premier In Services, Inc., is a Business Intermediary Consulting Firm headquartered in Orange, California. Plethora specializes in the listing and sale of small and medium sized private businesses.

Shalonda Chappel-Pilgram: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Mani Singh, Business Broker, Riverside, San Bernardino Counties

I have successfully represented clients sell & acquire multitude of businesses ranging from Gas Stations, Liquor Stores, Markets, Super Markets, Smoke Shops, Postal Stores, Restaurants, General Retail, Auto and Construction related. Phone me for assistance with selling or buying at 951-296-7646 Cell

Bob Baumgarten, Business Broker: Orange, LA Counties

National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-588-8727.


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